Flying Socialism; S. Husbands, Jr.

SAM H. HUSBANDS, JR. ~ JLYING SOCIALISM IT STANDS TO REASON that persons who want certain things accom plished will get the job done more promptly and efficiently than it could be done under compulsion that competitive private enterprise in a free market is more efficient than government operation and control. But this is a difficult mat ter to prove, for governments sel dom enter a business activity with out claiming a monopoly - that is, passing a law to forbid competi tion. The international airline traffic situation affords a rare opportun ity to compare private enterprise with government operation in the same competitive area. Here we may observe various privately owned and managed airlines oper ating side by side with government lines, using similar equipment, Mr. Husbands is with Dean Witter & Com pany in San Francisco. flying similar routes, and offering similar services.

Most of the airlines serving within the United States or orig inating here are privately owned and operated, whereas nearly all of the major airlines from other countries are under government ownership and control. For the most part, these major trunk lines, whether privately or governmen tally owned, use similar equipment and must be assumed to face simi lar costs for depreciation, replace ment parts, and fuel. The remain ing major cost factor, and the one that might be expected to show the greatest variation between businesses managed for profit and those under political management, would be the amount of labor used. The labor efficiency of handling passenger service, overhaul, pro motion, administration, and flying operations can readily be measured 17 18 THE FREEMAN February in terms of the number of revenue passenger miles flown per em ployee by the various airlines. Goverllmeftf Lilies vs. Private Lilies A striking contrast between two airlines operating over simi lar international routes with sim ilar equipment is afforded by Brit ish Overseas Airways Corporation (BOAC) and Pan American Air ways. Both are charaeterized by comparatively long flights per pas senger, averaging 3,200 and 1,800 miles respectively. Pan American is the larger of the operations, with slightly more than twice the number of aircraft operated by BOAC. In 1963 Pan American flew more than 2.6 times as many rev enue passenger miles (8,069,397, 000) as did BOAC (3,023,470,000), but with only 20 per cent more personnel.

A comparison between Air France and TWA shows the latter providing nearly 2V2 times the number of revenue passenger miles per employee as did Air France in 1963. KLM, operating 57 aircraft in contrast to 50 for Northwest Air lines, showed only 101,968 revenue passenger miles per employee com1963 WORLD AIRLINE STATISTICS Revenue Revenue Load Number Number Rev. Pass. Passengers Pass. Miles Factor 0/ 0/ Miles per Airline (Thousands) (Millions) (%) Aircraft Employees Employee Air France 3,483 3,266 52.6 135 25,000 130,623 TWA 6,197 7,016 51.8 144 21,730 322,883 BOAC 946 3,023 51.3 56 20,783 145,478 Pan American 4,478 8,069 57.2 116 24,851 324,711 KLM 1,466 1,591 43.6 57 15,600 101,968 Northwest 2,768 2,367 52.2 50 6,090 388,626 Lufthansa 1,992 1,621 54.0 39 12,224 132,608 National 2,167 1,726 51.5 33 4,416 390,816 Swiss air 1,802 1,160 52.7 30 8,471 136,833 Continental 1,697 1,210 50.5 23 3,081 392,861 SAS 2,377 1,592 49.7 47 11,772 135,208 Western 2,813 1,615 50.1 36 3,503 461,087 Data from American Aviation, American Aviation Publications, Inc., May, 1964, Vol. 27, No. 12.

1965 FLYING SOCIALISM 19 pared with 388,626 for Northwest. Lufthansa, Swissair, and SAS all averaged about 135,000 revenue passenger miles per employee, whereas National, Continental, and Western, with reasonably similar equipment and flight conditions, averaged from 390,000 to 461,000 r~v~nu~ p9.gg~n!!~r mil~g for ~g,eh employee. In other words, accord ing to these figures, it takes ap proximately three government em ployees to do the work of one employed privately under the prof it motive. It may be argued that wage rates are lower for foreign air lines, and that the number of em ployees is not a fair measure of the airline's efficiency, but it is noteworthy that flight crew per sonnel number about the same for privately owned airlines and gov ernment owned, and that U.S. air lines operating internationally em ploy mostly foreign nationals in their overseas ground operations.

In any case, to the extent that an airline has more personnel than needed to do the job, it is sacrific ing the standard of living, not only of those extra employees, but of all consumers in the economy. Private lines Would Reduce fares The excuse for nationalization of industry is often expressed in terms of "national interest" or "for the benefit of the people." It is ironic, but predictable, that the recent request for rate reductions of almost 30 per cent on the North Atluntie run WUg mudB by Pun American Airways and TWA. Equally predictable is that their government-owned competitors would argue to hold existing rates, as they contemplated the increased red ink they would show if these rate reductions were installed. The socialist insists that his ability to plan relieves his world of the anarchy of the free market, all to the benefit of the people. Yet, in this one area of the transporta tion industry where we can make a direct comparison, we find the government-owned airlines rela tively inefficient. Further, the in dications are that, without the competition from free enterprise, the government airlines would charge even more for their serv ices than they do now. Would that these lessons could be learned by all advocates of socialized produc tion. ~ Could Be "A REASON why the Russian communists are increasingly adopt ing free market practices in their economy," suggests Dean Russell, "is that they'd rather be fed than Red."